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No vote on deposit insurance levy says Irish league

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BELFAST (5/6/11)--The Irish League of Credit Unions did not present its proposal to add a special levy on member credit unions to boost its deposit protection fund during its annual meeting in Belfast last weekend. The league had planned to raise an additional $8.9 million for its Savings Protection Scheme (SPS), which provides emergency funding to ailing member credit unions (Irish Independent May 5). The movement's fund dropped to $109.8 million from $169.2 million after it provided financial help to 13 troubled credit unions. Since then, another seven credit unions have sought help from the fund. (All amounts reported are in U.S. dollars.) The motion was not presented at the meeting, a league spokesman told the newspaper. The league is in ongoing discussions with the Registrar for Credit Unions at Ireland's Central Bank about the possibility of the Central Bank taking over the stabilization fund and placing it under statutory authority.

Two mergers announced in Pa. and Minn.

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STATE COLLEGE, Pa., and PLYMOUTH, Minn. (5/6/11)--Four credit unions--a pair in Pennsylvania and another pair in Minnesota--have announced intentions to merge. In Pennsylvania, $66 million asset SPE FCU, State College, Pa., will merge with Huntingdon County FCU (HCFCU), a $12 million asset credit union in Huntingdon, the credit unions announced Friday (Centre Daily Times May 5). SPE has 8,500 members, and HCFCU has about 2,200 members. HCFCU had pursued a partnership that would provide members access to more products and services at competitive prices. It also sought reassurance that all its employees would be retained by the surviving credit union. The boards at both credit unions unanimously voted to accept SPEFCU's proposal to merge. Earlier this year, SPEFCU fulfilled a regulatory requirement by obtaining a community charter for Huntingdon County. In Plymouth, Minn., TruStone Financial FCU, a $664 million asset credit union, announced Wednesday an agreement with Ukrainian CU, a $6 million asset credit union based in Minneapolis, to merge operations, pending approval from the National Credit Union Administration this summer. The boards of both credit unions unanimously approved the merger at their last meeting. Both credit unions will operate under the TruStone Financial FCU banner. Ukrainian CU President Oksana Bryn noted that the merger will benefit both credit unions' members. "We will be able to expand our product line, reduce costs and further strengthen our financial value and relationship," Bryn said, adding that TruStone will be able to serve its members in Northeast Minneapolis. Bryn will stay on as branch manager of the Northeast Minneapolis location. TruStone, founded in 1939 as Teacher FCU, will have eight branch locations in the Twin Cities area serving nearly 57,000 members throughout Minnesota. Ukrainian CU, founded in 1968 to serve the Ukrainian community, serves more than 1,245 members.

Equifax report Credit scores are up

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ATLANTA (5/6/11)--The U.S. credit market is stabilizing and growing, and the nation's average credit score is increasing, according to Equifax's monthly National Credit Trends Report for March. That means delinquency rates are improving across the board, and more people will meet eligibility requirements for loans, said Equifax in a press release (PRNewswire May 4). That--and Equifax's finding that auto loans are up 23% over last year--would be good news for credit unions, whose members have slowed borrowing as they pay off debt. Auto loans traditionally have been bread-and-butter loans for credit unions. During the recession, however, mortgage lending and refinancing took on heavier portions of credit unions' loan portfolios. In addition to the auto loan increase, sustained new growth is underway in these markets having year-over-year increases in the number of loans: loans for bankcards are up 14%; consumer finance, up 5%; and home equity lines of credit, up 9%, said the business credit intelligence company. "Across multiple loan products, we are clearly seeing indicators of sustained credit growth--most notably within automobile finance and bankcard originations," said Michael Koukounas, senior vice president-special client services for Equifax. "Consumer behavior is now fueling much of this improved loan performance as borrowers are more aggressively paying off their outstanding debts, which is positively impacting their credit risk scores and making them more attractive to lenders. If this trend continues, I would expect to see a further loosening of available credit," Koukounas said. Consumers continue to more consistently pay credit bills on time while simultaneously paying down existing debit, resulting in an increase in the average credit risk score nationally, said the company. "Although credit available today represents about half of pre-recession levels in 2006, it is steadily increasing, with 2010 levels exceeding 2009," said Equifax. That trend is expected to continue for this year. Month-to-date new credit for 2011 totaled $51 billion--13% more than the $45 billion for the same period in 2010. Other findings:
* Auto loans: Average loan amounts generated through captive finance companies were up 88% over 2009 levels; * First mortgages: Prime originations (with Equifax risk scores of 700 or more) represented more than 75% of all first mortgage originations; * Consumer loans: Installment loans accounted for 33.9% of total consumer loans, a five-year high; * Bankcards: The number of new bankcards issued increased more than 14% over 2010 levels; * Retail card: Retail card originations notably increased for non-prime consumers (having Equifax risk scores less than 660); * Home equity: Data indicated a considerable shift toward prime borrowers--those with the lowest risk scores; and * Student loans: The average student loan amount declined in response to regulatory changes, but data indicate students are seeking supplemental credit to finance education.

CUs bumpy system upgrade a lesson for all

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BAKERSFIELD, Calif. (5/6/11)--Credit union employees--from CEOs to member service representatives--fear system conversions, for a lot of different reasons. Kern Schools FCU’s experience this week is Exhibit No. 1. Bakersfield, Calif.-based Kern Schools FCU began what CEO Steve Renock termed “a major, major conversion” Friday, changing over its core processing, online banking and loan servicing systems. The credit union was closed during its usual Saturday morning hours, and members couldn’t log on to their online accounts through Sunday. The credit union was scheduled to be closed on Monday, but the technical end of the conversion went well enough for Kern Schools to open its doors Monday morning, just 15 minutes later than usual. Then things began to unravel. The credit union was swamped with calls from members with problems logging into their accounts. Long lines formed at branches. A local television station did a story with outraged members who couldn’t access their accounts or speak with credit union representatives. Renock didn’t speak with the television news crew on camera, but he told News Now he believes the problems were somewhat overstated. First, he said there were no issues with data integrity or security, always chief concerns in any system conversion. Second, he estimates that 40% to 50% of the calls were related to password or username issues. “People were seeing things that they hadn’t seen before,” Renock said. “It was more a matter of familiarity. They were getting locked out of their accounts.” As examples, he said members weren’t sure what to use as their user names, which they didn’t have with the previous system, and the names of joint account holders are now listed on accounts--a feature that members requested. Part of the problem was members had grown very used to the old system. The credit union hadn’t done a conversion in 20 years, said Renock. “It was old,” Renock said. “We had to run so many patches to offer members all the services they need today. And it was expensive. This change will improve our expense ratio. And at end of the day, I think the members are going to like it better because we’ll be able to provide more services to them.” The credit union worked with its core system provider Fiserv to communicate the changeover with members, offering information online, including tutorials, and creating a 10-page brochure, Renock said. Renock said he anticipated some confusion among members--the credit union was fully staffed and no employees were allowed to take vacation during the conversion--but not to the extent that it occurred. “Could we have communicated better? Probably,” said Renock. “We could have explained the new system in more ways, in more places. We worked jointly with Fiserv who have been through this many more times we have, and they’ve been great through all of this. But right now, we’re taking our lumps.”

NEFCU college financing webinar broadcast now available

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WESTBURY, N.Y. (5/6/11)--NEFCU, a $1.56 billion asset, Westbury, N.Y.-based credit union, partnered with Hofstra University to sponsor a college financing webinar moderated by Newsday this month. The one-hour webinar, “Get Them There! How to Finance College,” provided information on college-financing subjects that included: Finding scholarships, filling the gap between traditional aid and the cost of college, working with financial-aid offices, avoiding over-borrowing, and estimating the true cost of a college education. The webinar ended with a question-and-answer segment. John Beneri, senior vice president of lending, represented NEFCU on the panel of financial experts, answering questions from webinar participants. The credit union considered the webinar an extension of the education-focused products and services it provides. “That’s a big part of why NEFCU was eager to co-sponsor this event,” Beneri said. “With the entire college financing process being so involved, it’s easy to get overwhelmed and miss some great funding opportunities.” Those who missed the webinar can view it for free online until July 7. Use the link.

CUNA Mutual net income up 71

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MADISON, Wis. (5/6/11)--CUNA Mutual Group’s operating revenues grew more than 3% and net income increased 71% in 2010, according to the company’s 2010 annual report. That performance led to an affirmation of CUNA Mutual’s financial strength and an outlook upgrade by a ratings agency. The company’s bottom line was bolstered by its diversification strategy, the company said. CUNA Mutual’s crop insurance business accounted for almost half of the operating revenue growth in 2010 to offset challenges credit union product lines faced due to poor economic conditions. Meanwhile, operating performance and lower investment impairments propelled net income to $87 million--up from $51 million in 2009. “Despite challenging economic conditions, we grew our financial strength by increasing our GAAP (Generally Accepted Accounting Principles) capital to nearly $1.9 billion, an increase of more than 50% compared to our capital position at the end of 2008,” said Jeff Post, president/CEO of CUNA Mutual. The company increased its support to the credit union system by $6 million. CUNA Mutual also disbursed more than $1.3 billion in benefits to U.S. credit unions and policyholders through claims paid and non-interest income. Though 2011 plans call for modest revenue growth, CUNA Mutual said it will continue to invest in its future with credit unions by increasing financial resources to its lending-related products and consumer businesses. CUNA Mutual said it also will be looking for growth opportunities through acquisitions, similar to the purchases of crop insurer ProAg and retirement plan provider CPI Qualified Plan Consultants in 2009. To access CUNA Mutual’s annual report, use the link. The solid 2010 performance contributed to financial ratings agency A.M. Best’s affirmation of CUNA Mutual Group’s financial strength rating at “A” (Excellent). The agency has returned the company’s outlook to stable. A.M. Best cited CUNA Mutual’s improvement in the overall quality of its balance sheet. The “A” rating applies to the principal companies of CUNA Mutual Group--CUNA Mutual Insurance Society, a life and health insurer, and CUMIS Insurance Society, Inc., a property and casualty subsidiary. The “A” rating is the third highest rating of 16 categories of ratings A.M. Best issues. “During these difficult economic times, CUNA Mutual has worked hard to keep premiums down, deliver greater value to credit unions and their members through our products and services, and still grow our company’s financial strength,” Post said. A.M. Best also affirmed the “A-” (Excellent) financial strength ratings of Producers Agriculture Insurance Company and Producers Lloyds Insurance Company (ProAg) with a stable outlook. A.M. Best also noted ProAg’s historical operating profitability and strong agency relations. The financial strength rating of MEMBERS Life, a dormant downstream life company that is not core to CUNA Mutual’s operations, was affirmed at B++ (Good) with a stable outlook.

CDCU leader Eakes named Ford Foundation Visionary

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NEW YORK (5/6/11)--Long-time community development credit union (CDCU) leader Martin Eakes, has been named a Ford Foundation Visionary, a new award that recognizes innovators whose work provides economic opportunities for marginalized people worldwide. Eakes is the founder of the Durham, N.C.-based Self-Help CU, the Center for Community Self-Help, the consumer advocacy Center for Responsible Lending, and most recently, Self-Help FCU, Oakland, Calif. Visionary Awards seek to raise the profile of leaders whose efforts on the frontlines of key social issues offer pathways to improved economic opportunities and expanded political and social participation for millions of underserved people worldwide, according to the Ford Foundation. Cliff Rosenthal, president/CEO of the National Federation of Community Development Credit Unions, commended the Ford Foundation on their selection of Eakes. “Martin has been a long-time member, colleague and ally of the federation,” he said, “What he and his staff have built in North Carolina has grown into one of the most sophisticated community development financial institutions in the nation. “With community development credit unions operating on both coasts; a multi-billion dollar affordable mortgage secondary market; and a respected consumer advocacy arm helping to combat insidious predatory lenders nationwide, he has single-handedly done more for low-income people in 30 years than many of us could hope to accomplish in a lifetime,” he added. Self-Help CU, the CDCU established in 1980, reaches low-income families underserved by conventional financial institutions. Self-Help has provided nearly $6 billion in financing to more than 60,000 homebuyers, small businesses and nonprofits, and serves more than 25,000 mostly low-income families through seven retail credit unions.

Caribbean CU succeeds with non-traditional services

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MAIMON, Dominican Republic (5/6/11)--Cooperativa de Ahorros y Créditos Maimón Inc. celebrated its 20th year of service last week with workshops, social gatherings and sporting events in the mountainous central valley town of Maimón, Dominican Republic. The credit union has flourished by offering non-traditional services to its members. The credit union has not only provided financial services, it has changed the social fabric of everyday life, said the World Council of Credit Unions (WOCCU). The credit union has established itself in the community by adding value through more than just financial services, offering vocational training programs to hundreds of young adults, fortifying municipal water systems, providing two ambulances and offering the only comprehensive funeral services in town.
Click to view larger image Visitors from the Wisconsin Credit Union League gather outside Maimón credit union’s main branch office in the Dominican Republic. The twin pines, a widely used symbol of cooperatives throughout Latin America and other parts of the world, is prominently displayed outside.
Click to view larger image Wisconsin Credit Union League President/CEO, Brett Thompson (left), accompanies Virginio Rafael Gerardo (right), president/CEO of World Council of Credit Unions’ (WOCCU) member organization in the Dominican Republic, on a visit to Maimón credit union through WOCCU’s International Partnerships Program. (Photos provided by World Council of Credit Unions)
“Maimón credit union has gone far above and beyond the call of duty in terms of service to members and the community,” said Pete Crear, WOCCU president/CEO, who along with the WOCCU board of directors visited the credit union in April. “This credit union provides a shining example of how non-traditional services can play a pivotal role in community development and improve the lives of members.” The credit union’s investments in the community have impacted on the quality of life there. It provides vocational training to young people who might not otherwise have the means to prepare to enter the work force or start their own businesses. It built a water tower to bring running water to residents. It owns and operates a funeral home adjacent to its offices and has a hearse. A funeral insurance plan for members and their families helps ease the financial and logistical burden of a death so the family can focus on mourning. Through four branch offices in the Monseñor Nouel province, Maimón also offers financial products and services, including youth savings and financial literacy programs, a savings incentive program and supplemental group health insurance. Its 43,000 members represent more than 60% of local residents, and assets total about US$52 million. It is currently planning a fifth branch office for the capital city of Santo Domingo. “What makes Maimón credit union truly great is its social engagement to benefit the community,” said Ramón Antonio Diaz Guzmán, Maimón credit union board president. “All types of people in the region, especially those most in need, come to our institution to address small but systemic problems. Maimón credit union will continue to leave footprints in the hearts of our members and the community.” Virginio Rafael Gerardo, president/CEO of Asociación de Instituciones Rurales de Ahorro y Crédito (AIRAC), WOCCU’s member organization in the Dominican Republic, organized the board of directors’ visit to the credit union. He said Maimon’s level of discipline makes it a top performer in the indicators AIRAC measures. It was recently recognized as “Credit Union of the Year.” “For [AIRAC], Maimón credit union has a philosophical importance because it demonstrates the true meaning of the credit union difference through its ability to address the basic needs of the community,” Gerardo said. “This helps show government officials that credit unions are a viable resource for human development, and they can take that into consideration when determining regulatory treatment.” AIRAC maintains connections within the global credit union movement through a partnership with the Wisconsin Credit Union League (WCUL), facilitated by WOCCU’s International Partnerships Program. During a 2009 visit, representatives from AIRAC, WCUL and WOCCU met with the country’s central bank, the Superintendency of Banks and the Institute for Cooperatives to work on modernizing regulations and oversight procedures to better address the country’s credit union structure. Pedro Silverio, CEO of the Central Bank of the Dominican Republic, asked AIRAC to submit comments to the current bill before it was introduced to Congress later that year. Brett Thompson, WCUL president/CEO, worked with the international team to draft comments for submission. Through their combined efforts, AIRAC influenced regulatory change for its country’s credit unions. Thompson and his WCUL colleagues also visited Maimón credit union and saw how the credit union served more than just the financial needs of its members, going beyond its membership to invest in community-wide infrastructure. “Maimón is engaged in possibly the purest form of credit unionism that one could imagine and serves as a great reminder to those of us in the U.S. of what our mission is all about,” Thompson said. WCUL is planning another visit to the Dominican Republic in October to run an advocacy and regulatory education program for credit unions. AIRAC will facilitate several week-long study tours in November for member credit union managers to work on risk management and loan processing issues at Wisconsin credit unions.

ICU Foundation awards 67190 in grants scholarships

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NAPERVILLE, Ill. (5/6/11)--The Illinois Credit Union Foundation recently awarded $67,190 in grants and scholarships to credit unions in the state. The foundation awarded $18,000 in small credit union development (SCUD) grants to 11 credit unions. The SCUD grants will be used for computer equipment, software updates, new printers, and a security system upgrade. The recipients were:
* Alton Bell Community CU, Alton; *C&NW Proviso CU, Northlake; *District 123 FCU, Oak Lawn; *Elgin Mental Health Center CU, Elgin; *Holy Family Oglesby CU, Oglesby; *IBEW Local 146 CU, Decatur; *Motor Coach Employees CU, East St. Louis; *Oak Lawn Municipal Employees CU, Oak Lawn; *Parish Members CU, Metamora; *School District #9 CU, Granite City; and *Urbana Municipal Employees CU, Urbana.
The foundation also awarded $2,000 in community service grants. The program is designed to encourage and reward chapter or credit union participation in local community projects. One chapter and three credit unions received a community service grant. They were: Danville Area Chapter, Milledgeville Community CU, Oak Lawn Municipal Employees CU, and Streator Onized CU, Streator. Armstrong Preferred Members CU, Bourbonnais, received a marketing and business development grant for $2,500. The program was established in 2006 to help credit unions with assets of up to $30 million to start or expand outreach efforts. The maximum grant award is $5,000 per credit union per year. Two credit unions received financial independence and revitalization effort (FIRE) grants totaling $3,500. The FIRE program helps credit unions provide credit and financial services to residents and businesses in low-income and underserved areas of Illinois. Community Plus FCU, Rantoul, and Sherwin Williams ECU, South Holland, used their FIRE grants to partner with the Center for Economic Progress to continue the Volunteer Income Tax Assistance program in their local communities. The foundation also awarded $41,190 in scholarships to 41 credit unions. Scholarships will enable recipients to attend ICUL educational opportunities and Credit Union National Association schools. There are two more grant request deadlines during 2011: July 31 and Oct. 31. Scholarships are reviewed on an ongoing basis while funds last. Online and downloadable grant request forms are available via the league’s website. Eligibility is limited to Illinois credit unions and chapters.

Study Consumers want human help in learning new technology

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ATLANTA (5/6/11)--Four out of 10 consumers surveyed would prefer to learn about new financial services technology by talking with someone at their credit union or bank, rather than learning it on their own, says a new study unveiled at First Data's Leadership Summit 2011. While financial institutions try to keep up with the latest banking innovations, more than a third of their member/customers surveyed said that technology advances too quickly for them (Business Wire May 5). The study, conducted by First Data, an electronic commerce and payment processing provider, and Market Strategies International, a global market research consultancy, reviewed consumer characteristics and their attitudes toward and use of technology such as online and mobile banking. It aimed to help financial institutions better understand which investments in technology will drive increased loyalty and transaction frequency among a wide variety of member/customers. It also identified trends about retail banking customers' perceptions and relationships with their financial institutions. "Our goal is to provide real, actionable data to help our financial institution clients develop focused technology plans," said Larry Drury, senior vice president, Global Marketing, at First Data. "These results will help our clients strike the right balance between technology and personal relationships regarding their retail banking customers." The study's findings included:
* Fifteen percent of consumers surveyed currently use mobile banking, and 3% indicated they intend to start using the feature in the next 12 months. Roughly 47% said they are familiar with the service but are not using it. That indicated that consumer education still is needed regarding the benefits of mobile banking, researchers said. * While two-thirds of consumers are familiar with account alerts, 37% of banked consumers currently use them, indicating that credit unions and banks may need to shift some of their focus from awareness to activation. * Six in 10 consumers surveyed still receive paper statements. That presents a "tremendous opportunity for cost savings" for credit unions and banks, said the report.
The research also identified six simplified but distinct segments of banking consumers based on demographic, behavioral and attitudinal differences--including consumers' inclination to use banking technology products and services. They are:
* Fast trackers--young family types who rely on smart phones and banking apps; * Young aspirationals--singles with varied interests and little banking loyalty; * Simplifiers--middle-aged, lower-income wage earners loyal to their local financial institutions; * Middle of the roaders--Middle-aged wage earners who wait until technology is proven; * Value seekers--Older, well-educated and financially comfortable who aren't interested in a lot of technology; and * Conventional stalwarts--Fixed-income retirees who prefer paper statements and live tellers.
"Having a better understanding of consumers' acceptance of technology, and the level of technology they're comfortable with, will help financial institutions reverse the troubling trend brought on by recent economic challenges," said Mark Willard, senior vice president and head of the financial services division at Market Strategies International. "We need to help financial institutions drive more transactions and strengthen loyalty. Our research points to the way technology can be leveraged to achieve those goals," Willard concluded.

CU System briefs (05/05/2011)

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* WASHINGTON (5/6/11)--The American Association of Credit Union Leagues (AACUL) has issued a call for entries to this year's Pro and Blockbuster Awards, which recognize outstanding league and league service corporations' communications efforts during 2010. Deadline for submission of entries is August 3. For entry guidelines, contact Richard Dines, director of league relations at Awards will be announced at the AACUL League Communicators Conference in Minneapolis Oct. 4-6 … * NEZPERCE, Idaho (5/6/11)--A former accounting manager of Kamiah (Idaho) Community CU has been ordered to pay more than $11,000 in restitution after pleading guilty to stealing funds from the credit union's expense accounts (Lewiston Tribune via May 5). Lorna D. Vickroy, 64, pleaded guilty last week to grand theft by transferring more than $6,700 into her personal account in a series of thefts between August 2009 and January 2011. She was also ordered to pay $4,750 for the credit union audit. Prosecutors did not recommend jail time because the credit union sought restitution … * DES MOINES, Iowa (5/6/11)--Paul Johnson has joined the Iowa Credit Union League (ICUL), the league announced on Wednesday. In his new position, Johnson will be responsible for the oversight and execution of the league's professional development opportunities as well as its Vendor Involvement Program. He reports to Jim Niederhauser. Prior to joining the league, Johnson served in positions at The Members Group and Wells Fargo International. He has a master's degree in business leadership from William Penn University and is a graudate of the Berklee College of Music …